Shut up Bill Nighy!

Bill Nighy is a great actor. I like his work. Always have done. He’s eloquent, engaging and highly articulate. Yet he’s utterly wrong, foolish, naïve and strangely motivated by this incomprehensible idea that a financial transaction tax would be a good idea.

In simple terms the financial transaction tax (sometimes known as a Tobin tax) is a levy on every trade made by a financial institution. Because most European trades take place in London, we will bear the brunt. Unless the whole world imposes such a tax, companies who undertake financial trading transactions will simply move their operations elsewhere. Thousands of jobs will be put at risk in the UK if we were to introduce it. But that’s not even the main point here. Why trade in financial products? Many of them are made on behalf of investors. Who are the biggest investors? Funds. Who do the funds represent? You. It’s your money. As soon as a tax is put in place on a trade, however small, it makes that trade more expensive and takes away from savers. Your pension fund will pay the tax. Your investments will pay the tax. Your ISA will pay the tax. In essence your money will be taken from your savings, pensions and investments to go into government coffers.

Whilst they may have contributed to our financial mess, the banks didn’t cause the financial crisis. Their failure is a result of our profligacy at government and personal level. We have to take some of the responsibility for the mess we are in and so do the politicians for encouraging it, regulating markets so poorly and allowing us to think that their spending was justified and worthwhile. Indeed the current turmoil across Europe can fairly and squarely be laid at the feet of our European politicians who, it appears, couldn’t run a bath let alone sort out a financial crisis. How dare they pontificate and prevaricate at this time when markets and our economy suffer directly?

Meanwhile an actor who earns hundreds of thousands of pounds, if not millions, everytime he accepts a new film deal is suddenly a world expert on taxation. A world expert on advocating a tax that he says is “sweet”. Perhaps because he has enough money that he doesn’t have to care about the implications. Yet he works for an industry that cries out for assistance and tax incentives to help it establish itself in the UK because of the jobs it creates. And so it does. But look at the top? Millions paid to actors who often organise their affairs in such a way as to avoid paying their full share of tax. Millions of pounds compared to the relatively low salaries for those that make it happen. It is an utterly contemptiblemessage from someone who works in an industry with a worse track record of paying those at the top too much whilst pleading poverty and securing tax incentives whilst treating its freelancers and lower members of staff so appallingly.

In the same way that the green arguments and climate change enthusiasts have tried to kill off the car and aviation industries, so those advocating financial transaction taxation want to kill off one of the UK’s most successful exports. Banking and financial services.

Before deciding what you think about this tax or indeed implicate banks for our current malaise, I’d ask you to think. Think carefully about what tax does. Where money raised will go. Who is behind the calls and what they are demanding. From the misguided bunch of protestors outside St Paul’s to a range of self-interested actors and social commentators, there are plenty of people who have an axe to grind. A desire driven by political aspiration to dismantle a system that has afforded us some incredible benefits. I’m not arguing against those who blame the banks and bankers for our mess because I want to protect the rich. Far from it. I’m arguing for us to think carefully about the best solutions that will help our nation and people for the next generation. Taxation of this sort won’t do it. It will simply take away even more from those who can least afford to pay.

My initial reaction to the Tobin Tax was fairly similar. However, I do think there are debate points here:
1. you say ‘we’ will pay the tax, and you also say ‘we’ must take some of the responsibility – bit of contradiction there. Also I think the ‘we’ doesn’t represent the whole population, it represents those that have a stake (however small) in those financial instruments.
2. It appears to me that there are a lot of transactions that take place when really the fundamentals haven’t changed too much, i am thinking equities and commodities. To an outsider is seems that many of these are actually seeking to make a short term gain on today’s piece of news – rather than the long term status.
3. There also seems (!) to be a lot of trading where the trader has no interest in the end product (e.g. wheat or oil), the forwards and future markets were designed to bring stability, but appear to have brought in excess trading.
4. We keep hearing that it is important to keep the banking/trading sector open in the UK, but actually part of me says it may be better if it was someone else’s problem

So, could a tax like this have a net result of reducing the amount of trading, and bring about some more stability?

In the end though, I suspect that if a tax was introduced it wouldn’t be long before financial instruments were designed to mitigate it anyway

PS I am not a protestor, self interested actor or social commentator – but I amy well be misguided and misinformed